Walmart Q2 Earnings Will Put Its 54-Year Dividend Streak to the Test

Walmart (WMT), the retail giant, is heading into the second quarter of fiscal 2027 with more than just a strong quarter hanging in the balance. Walmart has a reputation as one of the market’s most established dividend stocks. The company has raised its dividend for 53 consecutive years, placing it among the elite group of Dividend Kings. But a long dividend record is ultimately backed by the company’s ability to keep generating enough cash and profits to support it.

This is why the upcoming quarter is worth watching.

The Dividend King Argument Comes Back to Business Strength

Walmart’s 53-year dividend track record is not completely at risk from one weak quarter. In fact, the company has already announced a 5% increase in its fiscal 2027 annual dividend, which will come to $0.99 per share. The quarterly dividend is $0.2475 per share, which is payable on Sept. 8. So the second quarter earnings will not decide whether Walmart will abandon its dividend or continue paying. 

However, the upcoming Q2 print will reveal whether the underlying business continues to look strong enough to make the dividend policy sustainable over time. Currently, Walmart maintains a forward payout ratio of 35.2% and pays 0.86% in yield. While Walmart’s dividend is not big, it has earned its name because of its extraordinary ability to keep increasing its payout despite changing economic environments.

Q1 Gave Walmart a Strong Starting Point

In the first quarter of fiscal 2027, Walmart sales grew 7.3% to $177.8 billion. Adjusted operating income grew roughly 5% in constant currency, despite higher-than-anticipated fuel costs of $175 million in its global distribution and fulfillment operations. Walmart U.S. comparable sales increased 4.1%, with enterprise eCommerce sales up 26%. Beyond traditional retail sales, Walmart’s advertising business also grew 37% globally, with the U.S. advertising business up 36% alone. Consolidated membership fee revenue increased more than 17%, while Walmart+ membership fee growth accelerated and net additions reached a new Q1 high. 

Management highlighted advertising, membership, and marketplace as increasingly important sources of profitability. For investors, that suggests Walmart's growth strategy is extending beyond simply selling more products and is increasingly focused on building higher-value revenue streams around its core retail business. The second quarter will reveal whether the company is making headway on the profitability improvement that management outlined during the Q1 earnings call.

Q2 Is Supposed to Bring Better Profit Growth

Walmart said consumers, particularly in the U.S., are under pressure and looking to the retailer for value. The company has continued investing in prices and extending the rollbacks it began in the second half of 2026. By the end of Q1, Walmart had around 7,200 rollbacks in place. Management also warned, “If the current elevated cost environment persists, we'd expect somewhat higher retail price inflation in Q2 and the second half of the year.”

Nonetheless, the company stressed that the business remains strong and that it is making measurable progress in reshaping its profit mix while improving returns to shareholders. While free cash flow remained negative at $1.9 billion in Q1, Walmart still paid dividends totaling almost $2 billion. The company also ended the quarter with $10.7 billion in cash and equivalents, totaling $10.7 billion. 

For the second quarter, Walmart expects constant-currency sales growth in the range of 4% to 5%. It expects operating income growth of 7% to 10% and adjusted EPS of $0.72 to $0.74, in line with analysts’ estimates. For the full year, the company expects sales growth in the range of 3.5% to 4.5%. Based on Q1 performance, management now expects sales growth to be toward the upper end of that initial range. Operating income could increase by 6% to 8%, and the adjusted EPS range could land between $2.75 and $2.85.

What Analysts Are Saying About WMT Stock

On Wall Street, WMT stock holds a consensus “Strong Buy” rating. Of the 39 analysts covering WMT, 28 rate it a “Strong Buy,” six say it is a “Moderate Buy,” and five rate it a “Hold.” While WMT stock has climbed just 2.2% year-to-date (YTD), the average target price of $139.87 suggests it can climb by 21% from current levels. Plus, the high price estimate of $155 suggests an upside potential of 34% over the next 12 months.